7 Smart Ways to Use a Short-Term Loan | Payday Loan Tree Blog

When you are looking for some quick cash to help out between paydays, your options may be rather limited. Oftentimes, banks or credit unions do not provide loans as quickly as you may need it, and you may also not be able to receive small amounts. Other loans from different kinds of lenders may even require collateral just to secure the money. However, when you need a quick solution, payday loans can help.

Many people are wary of using payday loans because of the controversy surrounding their use. While payday loans can pose a threat if they are mismanaged, this is true of any loan. However, to help ease your mind, here are 7 smart ways to use a short-term loan to avoid causing more potential financial trouble:

1. Only use short-term loans for emergency situations.

While you may hear this everywhere, it is a very solid piece of advice to follow. Payday loans are specifically designed to be short-term solutions and can be particularly dangerous if abused. With that being said, if you know that you can repay the loan amount with your next paycheck, they can be used to eliminate unexpected expenses in the meantime. However, they should not be used for everyday spending, impulse buys, or as long term financial solutions.

2. Find out if payday loans are legal in your state.

Depending on where you live, you may not even be permitted to legally obtain a short-term loan. That is why it is very important to do your research beforehand so that you do not get taken advantage of by potential scammers. However, the payday loan industry is always changing, so be sure to check the legal status of loans in your state regularly.

In the United States, payday loans are prohibited in:

* Arkansas* Arizona* Connecticut* District of Columbia* Georgia* Maryland* Massachusetts* New Jersey* New York* North Carolina* Vermont* West Virginia

There are some states that make payday loans legal, but the rates are often so low that it is not necessarily profitable for lenders. These states include:

* Maine* New Hampshire* Ohio* Oregon

Everywhere else, payday loans exist with varying regulations. While some states have very strict regulations to help protect borrowers, there are others that have very little. In some cases, some people argue that looser regulations allow for more flexibility of loan terms to create better borrowing experiences. In other cases, people also argue that this offers less protection for consumers.

3. Confirm that a lender is legitimate.

After you have determined the legal status of payday loans in your state, you have to make sure you work with a legitimate lender. Consulting with consumer affairs departments and government resources will help you determine this. However, just remember that working with a legitimate lender does not necessarily mean that you will not run into trouble.

4. Know your rights as a borrower.

Because you can run into trouble even with a legitimate lender, that is why it is crucial to know your rights as a borrower. You can refer to government resources for the loaning of payday loans in your state to become more aware of the legislation. You should also completely review and understand any loan agreements that you do not have to sign if you disagree with the terms and conditions. If you know of any lenders that are violating your rights, it is crucial to let your state regulator know by filing a complaint.

5. Protect your sensitive information.

When submitting applications for a short-term loan online, protecting your information will help prevent you from becoming a victim of identity theft. Even if a lender is legitimate, if they do not have proper security in place for transactions through their websites, you are at risk. Before you submit applications, confirm that any websites used for transactions are secured. You can typically see this through verification seals from Internet security specialists. You can also be reassured if you see “https” at the beginning of an address because the “s” indicates a secured connection.

6. Know your limit.

When you apply for a short-term loan, calculate beforehand exactly how much is needed. By doing so, you can avoid taking out more than you have to if it is offered by the lender. Although it may be tempting to take out more, limiting yourself will help keep the total amount owing low, which ultimately means more money in your wallet.

7. Pay on time.

As always, paying on time will help prevent more financial problems and also prevent your credit rating from being negatively affected. If you cannot pay off the loan, selling possessions or seeking a loan from a friend or family to put towards the payday loan is ideal. Doing this will at least get the payday loan out of the way so that you do not earn even more debt. It will also prevent you from possibly being taken to court by the lender as an effort to collect what is owed.

With these 7 smart ways to use a short-term loan, you should be able to shop for and use one with peace of mind. Just remember that every loan has the potential to be dangerous if mismanaged. As long as you practice responsible use of the loan, it can be an effective way to help out between paydays.

This entry was posted
on Thursday, September 13th, 2012 at 12:16 and is filed under Uncategorized.
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